Better Choices for Connecticut’s Budget Difficulties

CSEA Members Attend a Candlelight Vigil on December 10th to Protest Against, And Raise Awareness of
Potential Budget Cuts to Vital State Services

Mike O’Brien,
Co-chair CSEA Legislative Action Committee

On January 9th of next year, Connecticut’s General Assembly will start its legislative session. Although the session will cover a range of topics of importance to CSEA members and to our state in general, the main responsibility of the General Assembly will be to pass a two-year state budget. As this article goes to print, we know the state is facing budget deficits for the next two years.

So far, the most common suggestion for closing the budget deficit has been to slash vital human services. As the state and national economies continue their slow improvement, the last thing we can afford is a rollback of programs that serve the poor, the elderly, children, and the disabled.

The effects of the Great Recession still linger in Connecticut: too many people are out of work and too many families can’t afford the essentials. State tax revenue, which is generated when our families earn income and purchase goods, remain depressed. At the same time that more people depend on the state for healthcare and other basic needs. The result is state budget deficits.

The cost of fixing these deficits cannot simply be budgeted away. Cutting the state’s budget just shifts the costs to someone else, namely towns and families. The question is who pays. We can shield the wealthiest people and corporations from any changes, but then lower, middle, and even upper-middle class residents will bear the burden of drastic cuts. They will lose health coverage, see their college tuitions rise, and face sticker shock when the next property tax bill comes due.

A “cuts only” budget represents a race to the bottom which risks turning Connecticut into something unrecognizable: a state which does not care about its most vulnerable residents. There are many different options when it comes to raising revenue and protecting services:

Raise income taxes for millionaires: $400 million. Ask people making over $1 million per year to chip in a bit more while ensuring our rates remain below New York’s. New rates:

Close corporate tax loopholes with mandatory combined reporting: $90 million. Our tax system allows multistate corporations to shift profits artificially to subsidiaries in states with lower taxes. Requiring combined reporting of corporate incomes—which 22 states already do—would reveal these tax avoidance schemes and close these loopholes.

Use the throwback rule so corporate income doesn’t escape taxation: $20 million. Since the 50 states’ tax systems do not always sync perfectly, income from some multistate corporations falls through the cracks and is not taxed anywhere. The throwback rule makes sure this “nowhere income” is taxed appropriately.

Reduce corporate tax expenditures: $75 million. Tax breaks for Connecticut’s largest corporations have grown enormously over the past 20 years, but job growth has been virtually nonexistent. We should set annual caps on business tax credits, like the roughly $100-million-per-year film tax credits, and examine them regularly to make sure they are delivering real benefits.

Improve enforcement at the Department of Revenue Services: $75 zmillion. Every year, millions of dollars in taxes go uncollected because we do not have enough staff at DRS to catch tax cheats and avoiders. In lean times like these, at the very least we should ensure existing tax law is enforced.

Raise the cigarette tax 95 cents to match New York’s: $75 million. Smoking accounts for over 440,000 deaths each year in the United States, nearly one in five deaths. Raising cigarette taxes is a proven strategy to reduce smoking, save lives, and help cover the cost of treating smoking-related illness.

Greed is ripping apart the social compact. It is corrupting our public discourse and pushing people into believing discredited ideas about how to build a strong economy. It has created a taxation system which insulates the superrich and large corporations while punishing working people.

Connecticut’s next state budget can be something which protects our values and helps grow the middle class, but only if we keep the pressure on the General Assembly and the governor to make better choices.